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Turning uncertainties... into opportunities

Event

On 30 July, Zimbabwe held its first and bitterly contested poll since Mugabe was removed in a de facto coup last year led by his fellow ZANU-PF party member and former security chief Emmerson Mnangagwa. 75-year-old Mnagagwa secured just over 51% of the the vote and narrowly avoided a run-off against Nelson Chamisa, the candidate of the main opposition party MDC (Movement for Democratic Change). On 1 August, opposition supporters took to the streets to protest against what they discribed as a rigged election. Unexpectedly, they were confronted with military force assaulting and detaining opposition supporters and killing six people. Numerous MDC activists and prominent opposition figures have gone into hiding.

According to various international observers’ missions, the election was indeed marred by procedural lapses while the violent crackdown against opposition supporters echoed the same old ferocious security tactics used under Mugabe’s 37-year authoritarian rule. The eventual international and regional observers’ verdicts were conflicting. The African Union (AU), the SADC (Southern African Development Community) and China quickly validated the result, while the United States, the European Union and the Commonwealth concluded the elections lacked credibility, and post-election violence reinforced their criticism. The MDC challenged the outcome at the constitutional court but the court rejected their fraud claim and Mnangagwa was sworn in as president on 26 August. Regional leaders like South African President Ramaphosa and Paul Kagame (Rwandan president and AU chair) attended the swearing in, while important western representatives stayed away.

Impact on country risk

Ruinous policies, corruption and mismanagement under Mugabe caused the economy to collapse and impoverished the country (see December 2017 article). Up until today, acute cash shortages still paralyse the dollar-based economy. Therefore, the country needs the IMF, World Bank and bilateral creditors to restructure huge outstanding unpaid debts (circa USD 9 billion) and supply new cash and financing. However, this re-engagement was said to be strictly conditional on political reforms together with smooth and credible 2018 presidential elections. In fact, these elections were hoped to mark the beginning of Zimbabwe’s revival after years of economic hardship and isolation, but instead the controversial course only raised anxiety on the country’s stability and political outlook. Indeed, human rights abuses, rising discord among military forces and internal ZANU-PF rifts persist and raise fears over renewed democratic backsliding or even another coup attempt. Over the coming months, it remains to be seen whether the democratic deficit will hold back western governments to agree on debt restructuring and IMF support or whether Mnangawa will nonetheless manage to legitimise his rule and re-engage investors. For the time being, Credendo will keep the short- and medium-long term political risk classifications stable in category 7.